A war we can’t afford
Mineral Resources Minister Mosebenzi Zwane has hailed the new Mining Charter as a “revolutionary tool” that will transform the economy and boost growth and investment.
The Chamber of Mines, which represents 90% of the industry, characterised the process leading up to the release of the charter as “seriously flawed” and rejected its “unworkable targets”. The chamber is now heading to court to interdict the implementation of the charter.
While welcoming some aspects, the National Union of Mineworkers slammed the inclusion of black nonSouth Africans as potential BEE beneficiaries, an element clearly aimed at accommodating the Guptas.
The only grouping that gave the charter unqualified endorsement was the Umkhonto weSizwe Military Veterans’ Association which – like Zwane – is in the Gupta kraal.
The markets reacted to the announcement of the charter violently, wiping R30 billion off the JSE’s mining stocks in no time. The rand, which had been on steady recovery on the back of external factors, took a 2% knock. Economists warned of further damage to the economy, which entered a recession last week. Furthermore, the announcement is bound to fuel negative sentiments, which was evidenced by the plunge in the RMB/ BER business confidence index, which fell to its lowest levels since the aftermath of the 2008 global crash. According to RMB/BER and the SA Reserve Bank, this is the longest period of business since the five years preceding the 1994 democratic breakthrough.
The urgent challenge then is to boost confidence and get the engine of the economy to purr just a little.
Finance Minister Malusi Gigaba said as much on Thursday when he said the country needed to move speedily in coming up with an “action plan that deals with boosting business and consumer confidence”. But if his colleague has his way, this is unlikely to happen. An uncompromising Zwane said this week that “the button has been pressed ... there’s no turning back”.
The cannons are loaded in preparation for a war the South African economy can ill-afford.
The transformation imperatives are noble. No one can argue with the fact that 23 years into democracy the complexion, structure, culture and values of the mining industry should be very different. Even the industry itself – albeit belatedly – has confessed to its sins of the past and is on a path of irreversible change.
But Zwane’s bona fides as champion of transformation is hugely suspect. In his 18 months in office his primary mission has been to empower and protect the Guptas. Zwane’s charter is a populist project that is not based on any conviction about transforming the South African economy. It is a scorched earth strategy, devoid of thought and foresight.
If the president and the finance minister are serious about restoring business confidence and reigniting the economy, the first step should be to avert the looming war.
They must immediately rein in Zwane and compel him to commit to a new genuine process of consultation.